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State Controller Cites Mendocino County Supervisors’ Role In Financial Chaos

The state Controller’s Office says Mendocino County Board of Supervisors shoulders significant blame for the chaos gripping county finances.

State auditors specifically cite the board’s failure to conduct a “risk assessment” of its controversial consolidation of two key county finance offices despite opposition from senior county staff. Other factors cited in the state report include leadership changes in the offices overseen by elected officials, high employee “churn rate,” and a decentralized county accounting system.

“Our review identified internal control deficiencies and other challenges that contributed to the county’s inability to prepare and submit its annual financial reports promptly,” said Kimberly Tarvin, a certified public accountant and chief of the Controller Office’s Division of Audits.

The state’s review did not draw any conclusions, however, about a local criminal investigation into the county’s now suspended Auditor and the former payroll manager, who face single individual charges of felony use of public funds filed by District Attorney Dave Eyster against them last October.

“During our review, we became aware that a former payroll supervisor may have received unallowable payments. This situation led to a criminal investigation conducted by county officials. Because this matter is the subject of litigation, we make no conclusions regarding the disposition or allowability of these payments,” according to the state report.

The state review clarifies some but not all the elements of what is being described in local legal circles as a “hot mess” heading for public court hearings later this month.

Elected Auditor Chamise Cubbison and former county Payroll Manager Paula June Kennedy deny any criminal wrongdoing in a case laced with local politics. It is set for a preliminary hearing on July 25 in Mendocino County Superior Court.

The 17-page state report was issued by state Controller Malia Cohen’s office and limited to the county’s internal controls over financial reporting.

Last week the state Legislature authorized a broader audit of all county functions including finances, contracts and procurements, and elections. That expanded state audit will cost taxpayers an estimated $800,000 over an 18-month-period.

The Controller’s Office report is largely supportive of contentions made by Cubbison, former county Treasurer-Tax Collector Shari Schapmire, and other former senior county financial staff who challenged the Board of Supervisors’ forced consolidation in December 2021 of the two key county financial offices. The veteran county employees warned then the consolidation, combined with chronic understaffing, would disrupt county finances.

Board Chair Mo Mulheren said Saturday night supervisors and acting Auditor Sara Pierce “take seriously” the state report and will continue to “follow through with making improvements for timely reporting of the county financials.”

Supervisors Ted Williams and Glenn McCourty, two board members who have promoted the notion of a new county Department of Finance more closely aligned with county administrators, did not respond Saturday to written requests for comment on the state report.

Delays in financial reporting triggered the political brouhaha, led by Williams who publicly charged the county had three “different sets of books.” It mushroomed when District Attorney Eyster filed a criminal case in 2023 accusing Cubbison of using an “obscure payroll code” to allow Kennedy, the former Payroll Manager, to collect $68,000 in extra pay during the Covid pandemic.

Eyster, who has wrangled with county auditors since 2011 over his own spending practices, specifically targeted Cubbison after they clashed about her questioning his office expenses, including DA-hosted dinners for staff and their guests at a local steak house under the guise of “staff training sessions.” An angry Eyster took the unprecedented step of publicly appearing before the Board of Supervisors in 2021 to block Cubbison’s appointment as interim auditor when former county Auditor Lloyd Weer retired early and selected her to fill out his term.

Eyster later launched a year-long criminal investigation based on tips from the County Executive Office and board members that Kennedy had allegedly drawn unauthorized extra pay with the permission of Cubbison.

Cubbison, however, contends former Auditor Weer and Kennedy reached the special pay agreement before she officially took over the office in January 2023.

While choosing not to weigh in on the pending criminal and civil cases stemming from the prosecution and suspension of Cubbison and Kennedy, the state report noted that the county “lacked sufficient internal controls over its payroll system” which might have resulted in “unallowable payments to a former payroll supervisor.”

State investigators found that the county’s payroll system allows employees in charge of the payroll process to “adjust their own payroll records.” It lacked, at the time, “proper segregation of duties” ensuring that no one employee can initiate, record, authorize, and reconcile a transaction without the intervention of another person.”

The Board of Supervisors since 2021 has blamed senior financial staff in the formerly separate two county offices for uncertainty surrounding the true state of county finances. The county ignored warnings from Cubbison and other senior county finance officials that the forced consolidation would seriously disrupt operations.

The state report concludes that in fact the controversial consolidation, and the early retirement of former Auditor Lloyd Weer, threw the county’s financial offices into disarray. Some supervisors advocate creating a new county Department of Finance to replace both county offices.

Despite the warnings, the county board failed to conduct a “risk assessment” of the merger, nor did they collaborate with department heads “to address concerns and to mitigate the effects that a merger would have on the offices.”

“Collaboration could have helped the merging offices to anticipate and plan for structural, personnel, and technology impacts, and to mitigate risks preventing the county from fulfilling its key responsibilities, including timely financial statements or required FTR’s (financial transaction reports) to state and federal agencies.”

The state review also concluded that insufficient staffing levels kept the offices before and after their merger from “accomplishing their duties and responsibilities in a timely manner.”

Board members were aware of the staffing woes presented to them by Cubbison.

“The departure of key personnel (in the Treasurer-Tax Collector Office) and the lack of sufficient experienced personnel made it difficult for the (Auditor-Controller Office) to complete financial and accounting functions,” according to the report.

With the board enforced consolidation, “these difficulties were compounded,” state auditors concluded.

“It is important to maintain an adequate level of competent staffing to ensure effective internal controls in critical offices” like the Auditor-Controller and Treasurer-Tax Collector.

Here is a link to the state Controller’s Office report on Mendocino County’s internal controls over financial reporting:


  1. mark donegan July 7, 2024

    I know everyone will laud this as if it was news. All three main points are well known to all.
    I don’t think we can undo what has been done so the first problem must be worked through whether it be Cubbison, Pierce, either and new a head with the re-created title. So many titles. I back both of them, in fact I have many words of praise for Ms. Pierce. She like Ms. Cubbison, in my opinion, speaks from the Heart. I like truthful people, there are so many untruthful ones around.
    Same with the churn rate, all we can do now is try to plug the leaks through strong retention programs and unity among what we have left. We have gone through a great purge, hopefully for our betterment. I refuse to be negative even if I disagree, I will forward the people I have personally met and like, and I will not support people who refuse to work with what we have, and each other. To me they are the largest part of the problem and why I’m glad for the purge, and happy people are unifying with the survivors.
    Lastly, we have known not only do we have 3 sets of books, the system that is supposed to centralize them, is kind of crappy, but doable apparently so far under Ms. Pierce. We did finally get our numbers in, very quickly when she was dropped into the fire. Nothing but respect for both her and Ms. Cubbison. We will be well served by either. I believe this report backs up many of Ms. Cubbison’s concerns she brought before the board on many occasions. Too many. They decided not only to ignore her plea’s, but stab her in the back.
    Because I’m becoming a familiar face and voice, many people think I agree with everybody around me.
    That would give Mo a good laugh…
    Hope you all have a Blessed day!
    Hydrate and be good to each other.
    Yourself if you can’t muster that up.

  2. George Hollister July 7, 2024

    “Collaboration could have helped the merging offices to anticipate and plan for structural, personnel, and technology impacts, and to mitigate risks preventing the county from fulfilling its key responsibilities, including timely financial statements or required FTR’s (financial transaction reports) to state and federal agencies.”

    As an outsider looking in, collaboration between the CEO and department heads, elected and otherwise, has been sorely lacking for at least the last 15 years, and the results strongly suggest this. The lack of collaboration has created a toxic work environment with the Board making matters worse with a tendency to arbitrarily micromanage. In the end, the dysfunction that exists is the full responsibility of the Board, and the hole they have put county government in will take a considerable effort to crawl out of. I wish the best to new and existing Board members in carrying out this highest priority, difficult task.

  3. John Sakowicz July 7, 2024

    I lay our county’s demise at the feet of Carmel Angelo. She was a bully. And like many bullies, she wasn’t very smart.

  4. chris skyhawk July 8, 2024

    If John Redding who was easily brushed aside by Travesty Ted Williams in the last primary said anything that was correct it was this:”we are a broken county”undoubtedly theres LOTS of blame to go around and everyone can find a scapegoat; I place some of the blame at the feet of Travesty Ted, who likes to collect paychecks rather than do actual work, and his constituents aka enablers because they are willing to vote for image over substance and integrity ; my hope is that TT faces a formidable electoral challenge next time around

  5. Robert Sites July 10, 2024

    The board of supervisors never seem to communicate with the people who are the most important, the workers, managers, and administrators of our country. The first thing they will do is hire yet another consulting firm from Berkeley or somewhere to relieve themselves of any responsibility for the big expensive messes they continually create at tax payer expense.

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